BOSA’s election slogan, “One Job in Every Home,” overlooks the reality of its high unemployment rate. With a 33.5% jobless rate and many discouraged workers, the outdated belief that one breadwinner can support a household fails to reflect modern economic needs. Minimum wage laws often hinder employment, excluding many from the workforce. The proposed Job Seekers Exemption Certificate (JSEC) could revitalize the job market, encouraging multiple breadwinners and economic growth.
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By Eustace Davie*
During this year’s South African elections, I saw a BOSA (Build One South Africa) election poster that read, “One Job in Every Home.” This slogan encapsulates the notion that a single breadwinner earning a “living wage” ought to be sufficient to support every household. The reality of South Africa’s economy, with one of the highest unemployment rates in the world, requires us to seriously rethink the idea that there is only one breadwinner per household. This assumption is not only outdated, but it also produces negative consequences, particularly when reinforced by minimum wage and other job-killing labour laws. By preventing multiple adults in each household from working, these laws increase unemployment and exacerbate economic stagnation.
The fallacy of the single breadwinner
The notion of a single breadwinner is old-fashioned and harks back to an era when family structures and economic conditions were vastly different. Today, many households consist of multiple adults capable of contributing to the household income. In South Africa, with an average household size of 3.5 people, many of whom are adults, the notion that one person’s income should suffice is both unrealistic and limiting.
The unintended consequences of minimum wage laws
Minimum wage laws, while intended to protect workers, always result in unintended consequences. By setting a wage floor, these laws create unemployment among low-skilled workers by pricing them out of the labour market. This disruption of the natural allocation of resources in the market leads directly to unemployment.
As of the second quarter of 2024 South Africa’s unemployment rate stands at 33.5%, with the expanded unemployment rate (including discouraged workers) at a staggering 42.6%. These figures highlight that the ever increasing minimum wage is not alleviating the problem but rather excluding millions of vulnerable South Africans from the workforce.
Multiple breadwinners: Household economic resilience
Encouraging multiple adults in a household to work, even at lower wages, would be far more beneficial than restricting employment opportunities through minimum wage laws. Currently, there are about 8.4 million unemployed South Africans, with 3.8 million discouraged job seekers who have given up looking for work. These 12.2 million unemployed people represent a significant portion of the population that could be contributing to household incomes and participating in the economy if it were not for South Africa’s restrictive labour policies.
The Job Seekers Exemption Certificate (JSEC): A practical solution
One innovative solution to this issue is the proposed Job Seekers Exemption Certificate (JSEC). The JSEC would allow job seekers to exempt themselves from certain labour regulations, including the minimum wage. This concept could be a game-changer for the South African labour market.
- Voluntary Participation: The JSEC would be entirely voluntary. Job seekers can choose to apply for the certificate if they believe it will help them find employment.
- Regulation Exemption: With a JSEC, individuals are exempt from certain labour laws, such as minimum wage requirements and some conditions of employment. This exemption could make them more attractive to potential employers who might be deterred by the costs and complexities of compliance with these regulations.
- Employment Agreement: Employers who hire individuals with a JSEC could negotiate wages and working conditions directly with the employee, without being constrained by statutory requirements. This can lead to more flexible and mutually beneficial employment arrangements.
Benefits
- Increased Employment: By lowering the cost and risk associated with hiring, the JSEC could encourage businesses to take on more employees, particularly those who might otherwise struggle to find work.
- Skill Development: Even at lower wages, employment allows individuals to gain valuable skills and experience, improving their long-term employability and potential earnings.
- Economic Growth: Reducing unemployment can lead to broader economic benefits, including increased productivity and consumer spending.
Although BOSA’s slogan “One Job in Every Home” is well-intentioned, it is rooted in old fashioned thinking that no longer reflects South Africa’s economic or social reality. The Government of National Unity (GNU) should aim for policies that enable multiple breadwinners per household to earn a salary and contribute to the economy, even if these salaries are from low-paying or entry-level jobs. Implementing the Job Seekers Exemption Certificate (JSEC) would be a quick and cost-effective win for the GNU, providing immediate relief by freeing the unemployed from the job killing shackles of the labour laws and allowing more individuals to enter the workforce. The JSEC would not only reduce poverty but also boost economic growth. This more modern approach to labour policy would harness the power of the market to improve poor people’s lives by allowing individuals to make their own decisions that best suit their personal circumstances.
Read also:
- SA youth pessimism soars: Corruption and unemployment fears cloud future prospects
- How poor governance has caused SA’s unemployment crisis: Ann Bernstein
- The education myth: Why degrees won’t solve unemployment – Woode-Smith
*Eustace Davie is a Director of the Free Market Foundation.